Losses arising from trading errors, largely due to human error continue to account for the vast majority of claim activity in the industry. It’s not necessarily the case that there are more trade errors being committed but rather our insureds are better informed about the protection available to them under their policies.
Mitigation (or cost of correction cover) provides a mechanism for covering trade error losses and that cover should always be as broad as possible for asset management insureds.
Broad cover for regulatory exposures continues to be a high priority for our insureds. As regulators, especially the SEC actively seek to increase the tools available to them in order to examine and control the activities of investment managers we must look at ways of increasing the cover available to our insureds.
Designing policies that respond to the costs associated with a skilled Persons review under s166 of FSMA and the issuance of a Wells notice where the insured is identified as a target of any hearing or inquiry is a top priority and one that insurers need to consider carefully when writing asset management business.